Five and twenty

The troubles inherent in flying domestically in India have been well documented. The situation internationally is just as serious. State-owned Air India (AI) remains a basket case. Jet Airways, now part-owned by Abu Dhabi’s Etihad Airways, is only now striving to get back into the black under a new management team. Debt-ridden SpiceJet has been near collapse and has had to be rescued by its founder Ajay Singh from going the way of the collapsed Kingfisher Airways. AI and Jet are really the only ones flying longhaul, although Jet has been rationalising its network to hub through Abu Dhabi. Budget IndiGo and SpiceJet have only single-aisle aircraft, limiting their overseas operations to regional destinations. GoAir plans to launch internationally once the rules change but it also has only single-aisle jets.

Across the board, they all face intense competition on international routes, not only from big operators from Asia Pacific but from the fast growing Gulf operators and European giants. When the rule is changed, which now seems certain, the landscape is set to get far worse.

One of the new entrants in the Indian domestic market, full-service Vistara, a joint venture between Singapore Airlines (SIA) and India’s Tata Industries group, announced in late February it plans to take full advantage of the departure of 5/20. Its chief executive Phee Teik Yeoh says not only regional destinations are on the agenda but flights to Europe and the US.

With heavy hitters like SIA and Tata behind it that should strike some trepidation among those already operating long-haul, although Vistara does say it will take it a year to 18 months to organise the widebody jets necessary for extended operations.

The other fledgling local airline, AirAsia India, backed by Asia’s largest budget operator, Malaysia’s AirAsia, will also turn its mind to international routes.

Complicating matters will be the arrival of a veritable stampe

de of new airlines domestically, some of which may also be interested in entering the

Incumbents have no serious international ambitions.

offshore melee. Minister Raju last year gave six new carriers permission to fly, an about turn of previous policy which had seen his predecessors limit new licences. Some of these airlines had been chasing clearance since 2005 and had seen through three aviation ministers: Praful Patel, Vayalar Ravi and Ajit Singh. Now, the six – Air One, Premier Air, Zexus Air, Turbo Megha, Air Carnival and Zav Airways – are in the planning process. None have announced launch dates but the first into the sky is expected to be Premier Air, around mid-year, with most of the others arriving before the end of 2015.

Not surprisingly, some of the incumbents aren’t too happy about the prospect of new competition on international routes that are already the scene of heavy infighting. The Federation of Indian Airlines, whose members include Jet, IndiGo and GoAir, has strongly opposed any changes, arguing it will unfairly benefit the likes of Vistara and AirAsia.

Vistara’s chief Yeoh says they don’t have a case. “Incumbents have no serious international ambitions. The 5/20 rule should go very soon as it does injustice to the country. It only frustrates Vistara, AirAsia India and the next six airlines. It puts a lid on growth of aviation, stifling growth of trade and business here. Hopefully, we will be able to operate overseas very soon,” he said.

All in all, the prospect is that India, which now has eight airlines, will by next year have 14. Domestically and internationally it will usher in a new era of immense competition in a market where the players, despite the huge growth potential, have shown little ability to deal rationally with market forces. More airlines almost certainly means more irrational fare discounting at home and abroad and real potential for further failures.